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Marketers find Internet gives direct new power

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For many business-to-business marketers, the Internet is increasingly the "direct" in direct marketing.

More b-to-b marketers than ever are prospecting on the Internet, improving customer acquisition and retention through e-mail marketing, and quantifying return on investment for Internet media. They're also creating media campaigns for direct response, developing online components of frequency-marketing programs, personalizing banner ads and delivering real-time customer service online.

Online b-to-b direct marketing is a powerful economic force. At the Direct Marketing Association's annual meeting in October in San Francisco, Robert Wientzen, president of the New York-based DMA, cited a U.S. Commerce Department prediction of $300 billion in sales from 1998 through 2002 in online b-to-b direct marketing.

So the DMA is stepping up its focus on b-to-b direct marketing and the Internet, with plans to add research and conferences. It already runs the Direct Marketing to Business Conference, Feb. 7-10 in Orlando, Fla., and the DMA net.marketing Conference & Exhibition, Feb. 28-March 2 in Los Angeles.

Here's a look at some of the issues and trends shaping b-to-b Internet direct marketing:

Internet media often outperform traditional media in online ROI, says Chris Peterson, president of FusionDM, formerly Times Direct Marketing, a San Francisco-based direct-response agency. "Direct response involves any kind of marketing communication that has a trigger -- a phone number, a Web address, a card that could be torn out and sent in -- that allows a prospect to respond directly to an ad."

FusionDM specializes in the development of online direct marketing programs for high-tech companies, including IBM Corp., Hewlett-Packard Co., PeopleSoft and PointCast.

"We use banners, e-mail, direct mail, outdoor, radio and print to drive traffic to [a] site," Mr. Peterson said. "Then we take the cost of each medium and divide it by the number of respondents by that medium, and that is how we calculate ROI. And the Internet media perform extremely well."

The Internet is redefining the use of traditional media in direct response, he said. For example, a campaign in the works for PeopleSoft, a Pleasanton, Calif.-based provider of enterprise software, will use radio to drive traffic to a Web site, an emerging tactic in b-to-b. Radio ads will include a Web address, rather than a phone number, for a PeopleSoft contest, Mr. Peterson said.

"What makes this campaign so interesting is traditionally, when you talk about b-to-b direct marketing and the Internet, it is limited to banners and e-mail. Now we will try broad-based media to drive people to the Web," he said.

"If, with radio, we get 100,000 people coming to a Web site to enter the contest, and even if the vast majority are unqualified, it doesn't matter, because there is no incremental cost associated with them. The only reason we can do this is because of the cost effectiveness of the Internet," Mr. Peterson said. "And this can address one of the challenges of marketing on the Internet, which is getting anything out to a large-scale group."

E-mail helps develop relationships. Bill Herp, president of E-Dialog, Lexington, Mass., is betting on what he calls "e-direct" response marketing. This, he says, enables marketers to develop relationships with their target audiences by using e-mail, but not like spam. That is, e-mail goes only to regular buyers, and they are given the opportunity to opt out at any time.

For example, a company could receive an e-mail that says, "It's time to order more toner," and the recipient would just need to reply to that e-mail to avoid going to a Web site and filling a shopping cart.

E-Dialog offers software and direct marketing techniques to manage data and lists, campaigns and responses. Clients include Harvard Business School Publishing in Boston, and Sheshunoff Information Services, an Austin, Texas-based Thomson Financial company.

For one E-Dialog client, the objective was to offer a 30-day free trial of a product to prospects through e-mail, then compare the response to that of fax and direct mail. If the product was not returned, the customer would be billed. The challenge: to simplify free-trial acceptance and maximize response while maintaining the ability to verify and update shipping addresses.

E-Dialog met the challenge by using QuickReply, its outbound-message software, which allowed respondents to accept the free trial and update their address information in the e-mail reply.

Banner ads get personal. For more effective Web advertising, some b-to-b marketers are personalizing banner ads. Personalization may result in better click-through rates and conversions to qualified leads than adding audio and video would, Mr. Peterson said. "For example, if I work at IBM and I go to the PC World Web site, a banner can say, `IBM, click here.' "

B-to-b frequency programs add online components. "There is a whole new dimension of communication for b-to-b frequency programs by using the Internet," said Rick Barlow, president, Frequency Marketing, Cincinnati. "Marketers can communicate more effectively and the cost is substantially less."

"Frequency-marketing programs really thrive and grow and operate on ongoing dialogue with customers. The barriers to the effectiveness of the dialogue are the cost of the communication and the time lag of the communication," Mr. Barlow said. "The Internet makes both of these disappear. There is no postage, no printing, no paper, no data entry."

Companies see a growing need to appoint a senior manager of the Internet. "Companies don't have an organizational structure to accommodate the Internet, so companies that do b-to-b must reorganize and appoint a senior manager for the Internet to report directly to the president," said Tracy Emerick, founder and principal, Taurus Direct Marketing, Hampton, N.H.

"Right now, if you call the Internet a communications tool, it falls into the advertising and marketing department or even sales, and they are into customer acquisition and maintenance," he said. "If you call it an IT [information technology] product, it falls into that group. Neither one is the right place, but both need to be involved. A senior manager needs to be named to champion the Internet."

More business-to-business marketers are using software for online, real-time customer service. Online, real-time customer service is a big plus, especially globally, because of cost effectiveness and time differences, Mr. Emerick said.

But online customer service has not reached its potential, he said. "Right now, it is more like a phone center. We all know the Internet is so much more than that," he said.